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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Balance of Power podcast. Catch us live weekdays at

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: I'm Joe, Matthew and Washington. Thanks for coming along with

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Speaker 2: Thursday edition. Yeah you made it to Little Friday. We

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Speaker 2: have a lot of wood to chop here, or should

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Speaker 2: I say a lot of wine to drink. The big

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Speaker 2: development this morning is we wait for more news on tariffs.

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Speaker 2: Donald Trump going after the wine, the champagne and the

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Speaker 2: other alcoholic beverages from Europe. As you heard Charlie Pellett mentioning,

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Speaker 2: it's moving the stocks. And boy, what a time to

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Speaker 2: pick this, right. I thought we all stopped drinking because

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Speaker 2: of the GLP ones. Now this you're gonna take my

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Speaker 2: Brunello de Montalcino away. As the President writes, the US

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Speaker 2: will shortly place it's a two hundred percent tariff on

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Speaker 2: all wines, champagnes and alcoholic products coming out of France

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Speaker 2: and other EU represented countries. Yes, your shotow enough to

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Speaker 2: pop could double in price. He says, this would be

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Speaker 2: great for the wine and champagne businesses in the US. Okay,

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Speaker 2: so we're drinking California starting pretty soon, but you can't

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Speaker 2: get champagne here in the US. And he knows that

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Speaker 2: because well, Donald Trump has his name on Sparkley Wine

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Speaker 2: in Virginia. Right. So, Howard Lutnick making the rounds this morning,

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Speaker 2: because it's Thursday, every cabinet secretary is on TV somewhere,

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Speaker 2: in this case, the Commerce secretary on Bloomberg TV talking

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Speaker 2: about EU tariffs. Here's what he said.

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Speaker 3: The EU is just so many years treated us so harshly.

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Speaker 3: They just can't stop. Look, their tariffs are way up

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Speaker 3: here and our tariffs are down here. How about relax,

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Speaker 3: let us balance it. We are your largest most important

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Speaker 3: trading partner. Treat us with respect and let's get a

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Speaker 3: little And Donald Trump is out there's saying balance, balance, Balance.

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Speaker 3: April second, he's going to describe his balance. We're going

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Speaker 3: to do it together.

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Speaker 2: April second. Of course, that's the date the reciprocal tariffs

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Speaker 2: take effect. Howard Lutnick on Bloomberg's surveillance, making the case,

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Speaker 2: beating the drum as we now turn to Jenny Welch,

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Speaker 2: imagine at this moment being the chief geoeconomics analyst at

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Speaker 2: Bloomberg Economics. What a time to have your business card.

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Speaker 2: Great to see you, Thank you for coming in. This

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Speaker 2: is happening as the President sits down with the NATO

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Speaker 2: Secretary General, which I'll ask you about. We might even

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Speaker 2: get a taste of their conversation a little bit later

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Speaker 2: on this hour. But boy, this really gets back to

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Speaker 2: the noise and this hits home for people. Right, my

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Speaker 2: wine's going to double in price. That's sort of different

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Speaker 2: than steel and aluminum, right.

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Speaker 4: Absolutely.

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Speaker 5: I think this is also an interesting reminiscence of the

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Speaker 5: previous trade war with Europe back in Trump's first term,

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Speaker 5: where he also threatened French wine. At that point in time,

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Speaker 5: they back down from it, So maybe there is a

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Speaker 5: chance that they'll back down from this as well, and

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Speaker 5: we can avoid, yeah, paying more at the liquor store.

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Speaker 2: This is a direct response, I guess to the bourbon

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Speaker 2: levies that we got from Europe yesterday, went after Kentucky

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Speaker 2: Bourbon blue ds Harley. These are pretty narrow though, right,

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Speaker 2: and so is wine. I mean, are we tinking around

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Speaker 2: the edges here. When you talk about aluminum and steel,

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Speaker 2: that's big business.

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Speaker 5: That's big bigness. And really what happened here is that

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Speaker 5: Europe had snapback tariffs from that previous trade ward. They

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Speaker 5: just let them come back into play, and they're intentionally

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Speaker 5: targeting these politically salient industries in the United States and

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Speaker 5: counties that voted for Trump.

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Speaker 2: Right.

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Speaker 5: It's a tactic that we've seen other players use, like

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Speaker 5: China with agricultural terrifts as well. The intent is to

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Speaker 5: get him to back off. Obviously, this might lead to

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Speaker 5: more of an escalation. And to your point, we were

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Speaker 5: expecting April second to be the main showdown with the

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Speaker 5: reciprocal terrorists. We're already having an escalation just based off

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Speaker 5: of the steel of aluminum, and I think that really

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Speaker 5: highlights the volatility of this moment.

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Speaker 2: This is soon right, shortly he said we'll place some

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Speaker 2: two hundred percent tariff on the wines, et cetera. I

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Speaker 2: believe it was Jonathan Farah who asked Howard Lutnik this morning,

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Speaker 2: you know what's the timeline here? It didn't really seem

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Speaker 2: to answer it. Or so again, are we just riffing

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Speaker 2: or maybe that is part of the April second reciprocal

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Speaker 2: We have no idea.

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Speaker 5: Well, part of it too is waiting for the EU

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Speaker 5: to make their full responsors the snapback terraffs that have

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Speaker 5: to come into place. But there's additional terrafs that the

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Speaker 5: EU is going to be voting on later this month

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Speaker 5: on top of those snapback terriffs from before. So maybe

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Speaker 5: part of this is just the negotiation in public to

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Speaker 5: try and walk the EU back before they have some

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Speaker 5: of those internal conversations.

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Speaker 2: Look at this. Just as we're talking, Producer James puts

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Speaker 2: the headline here in front of me. EU Trade Commissioner

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Speaker 2: to have call with the US counterpart on Friday. So

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Speaker 2: we're drinking wine this weekend? Is that the European wine?

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Speaker 5: Maybe I would say buy it now just in case.

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Speaker 2: Okay, stockpile this. Boy, what a moment we're in here.

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Speaker 2: And now you're a geoeconomics analyst and we frequently align

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Speaker 2: you with geopol not you know, trade war is over

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Speaker 2: alcohol is? Does this actually move the needle in your space?

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Speaker 5: I think everything that President Trump has been doing to

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Speaker 5: date has been moving the needle in terms of how

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Speaker 5: we think about economic coercion and economic state craft. Toolkits right,

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Speaker 5: his willingness to use tariffs not just as an instrument

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Speaker 5: of trade policy, but of all foreign policy.

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Speaker 2: So let's talk about geopolitics a little bit here, because

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Speaker 2: this is a very serious meeting actually today at the

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Speaker 2: White House. The Secretary General of NATO probably doesn't have

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Speaker 2: household name recognition like say Emmanuel Macron or President Zelenski,

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Speaker 2: but this is going to get to the heart of

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Speaker 2: some real tension between the US and Europe. As you've

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Speaker 2: pointed out a couple of things that we're going to

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Speaker 2: be looking at here. It's going to involve trade, certainly

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Speaker 2: the terror off conversation we're having, but really it's going

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Speaker 2: to be about Ukraine and the US commitment to NATO,

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Speaker 2: which is a much bigger question when you think of

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Speaker 2: it here.

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Speaker 4: Yeah.

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Speaker 5: Absolutely, this visit is taking place at a pretty stark

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Speaker 5: time for Europe or they're facing a trade war with

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Speaker 5: the United States and also facing this pivot essentially that

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Speaker 5: President Trump has undertaken over the last month of reproach

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Speaker 5: mot with Moscow, putting a lot more pressure on Ukraine.

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Speaker 5: Now there's been a successful meeting, it looks like between

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Speaker 5: US and Ukrainian officials. Earlier this week that maybe has

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Speaker 5: walked some of that pressure back, but I think Europe

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Speaker 5: is still reeling from that pivot and thinking about what

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Speaker 5: it means now for it to have to stand up

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Speaker 5: for itself and hold its own security without being able

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Speaker 5: to rely on the US.

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Speaker 2: They're going to be in the Oval Office at least

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Speaker 2: by the schedule five minutes from now, and things may

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Speaker 2: well run a little bit late here. Much of this

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Speaker 2: will have to do with the spending commitments right that

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Speaker 2: NATO members make, also the veracity of Article five. Donald

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Speaker 2: Trump has recently questioned this, again, suggesting that we may

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Speaker 2: not defend allies who don't pay the full freight he wants.

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Speaker 2: Five percent is that the going right now?

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Speaker 5: Five percent is above and beyond what most NATO members

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Speaker 5: can reach. Poland is the country that's closest to it.

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Speaker 5: In the US as well below five percent, and frankly,

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Speaker 5: it would break the bank for a lot of European

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Speaker 5: NATO members. That being said, they have raised defense spending

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Speaker 5: over time, including since you know, Trump put this pressure

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Speaker 5: on them in his first term. But the challenge is

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Speaker 5: really going to be how they do that while managing debt,

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Speaker 5: How they do that with the defense industry that's much

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Speaker 5: smaller than the United States. I mean, the prospect of

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Speaker 5: Europe having to stand up for itself. That's not a

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Speaker 5: one year, couple months effort. It's something that will take

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Speaker 5: many years to build up that capacity.

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Speaker 2: Yeah, this is quite remarkable. He was asked about this

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Speaker 2: by NBC News that we would not protect NATO members

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Speaker 2: who fail to meet these spending demands. Quote, it's common sense, right,

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Speaker 2: If they don't pay, I'm not going to defend them. Unquote.

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Speaker 2: If you're the NATO Secretary General, how do you get

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Speaker 2: into this today in the oval office?

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Speaker 5: So I think one upside for the Secretary General is

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Speaker 5: that he has also been urging European NATO members to

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Speaker 5: spend more on defense and has echoed some of the

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Speaker 5: higher numbers that President Trump has earned out there. I

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Speaker 5: think the other way he could potentially frame this as

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Speaker 5: is the amount of benefits that NATO and NATO allies

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Speaker 5: present to the United States in terms of cost cutting. Right,

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Speaker 5: the US has bases in Europe that provide for US

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Speaker 5: security back at home, you're closer to Russian missile silos. Second,

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Speaker 5: those NATO members are kind of your front line. They're

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Speaker 5: providing Sure, maybe not as much as you would like

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Speaker 5: them to in terms of troops and weapons, but they

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Speaker 5: are covering some of those costs for you. And third,

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Speaker 5: just the prospect of NATO as an alliance and the

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Speaker 5: deterrence value that that creates with Russia, with China, with

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Speaker 5: Iran is unmatched elsewhere in the world. No one else

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Speaker 5: has that many allies that they can draw upon.

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Speaker 2: Right, how about that? In our remaining moment, I suspect

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Speaker 2: that the Secretary of General will make the case to

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Speaker 2: Donald Trump that if Ukraine falls, it is more dangerous,

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Speaker 2: it is more expensive to exist as NATO.

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Speaker 5: That would be the argument I would certainly make, and

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Speaker 5: I think in particular when you think about it from

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Speaker 5: Russia's perspective, if Ukraine falls, what are its next targets?

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Speaker 6: It's probably the bult.

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Speaker 2: Poland's on the front door of pactics are standing right

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Speaker 2: there waiting for you. Estonia is listening closely to this

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Speaker 2: conversation today, isn't it?

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Speaker 4: Yeah?

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Speaker 5: Estonia, Lithuania, you know, Poland, Latvia, They're all going to

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Speaker 5: be watching very closely.

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Speaker 2: There's a lot on the line here. Stakes are high,

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Speaker 2: and that's usually when we bring in Jenny Welch Thank

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Speaker 2: you so much, Jenny. It's a great conversation as always

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Speaker 2: Bloomberg Economics. Find Jenny's byline on the terminal and online,

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Speaker 2: of course, at Bloomberg dot Com. I'm Joe, Matthew and Washington.

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Speaker 2: We thank you for being with us here on the

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Speaker 2: Thursday edition as we plow ahead with what's happening on

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Speaker 2: the other end of Pennsylvania Avenue. We will bring you

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Speaker 2: into the old for that conversation when it happens later on.

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Speaker 2: But of course we've got to talk about a government

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Speaker 2: shutdown potentially now in two days after Chuck Schumer said

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Speaker 2: Democrats will not play along in the Upper Chamber. Do

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Speaker 2: we believe them? We'll talk about this and what the

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Speaker 2: economic impact could be with Tazra Mitchell coming up next.

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Speaker 2: Right here on Bloomberg.

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Speaker 2: on the White House. The President today meeting with the

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Speaker 2: NATO Secretary General in the Oval. It could get chippy.

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Speaker 2: Will bring you in there when they get in there.

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Speaker 2: But you know, not a lot of things in Washington

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Speaker 2: happened on time. That could be the case. By the way,

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Speaker 2: for a vote on a bill to avoid a government shutdown,

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Speaker 2: are they going to get this done? Maybe not. Things

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Speaker 2: have become a lot more complicated over the past twenty

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Speaker 2: four hours. Here. John Thune did file cloture. The Senate

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Speaker 2: majority leader on this House pasted cr the one we've

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Speaker 2: been talking about last night. That means a cloture vote Friday.

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Speaker 2: But wait, you say government's supposed to shut down Friday night.

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Speaker 2: Gets a little complicated when Chuck Schumer says Democrats are

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Speaker 2: not going to vote yes for this thing, and that

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Speaker 2: may not be the case in the end, but we've

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Speaker 2: got a roadblock right now on the Democratic side. So

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Speaker 2: a time agreement would be necessary to avoid at least

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Speaker 2: a shutdown over the weekend, which might not be that

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Speaker 2: big of a deal. The problem is, as Democrats watched

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Speaker 2: the Doge do its work, there's a big question about

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Speaker 2: what would happen if the government actually was allowed to

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Speaker 2: shut down. What would reopen? Maybe entire agencies would remain

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Speaker 2: shut down, certainly during the span of the closure. Donald

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Speaker 2: Trump would be able to make those decisions. And we've

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Speaker 2: talked about this before on the air with a lot

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Speaker 2: of people who know a lot more about this than

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Speaker 2: I do. The fact of the matter, as presidents enjoy

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Speaker 2: broad powers in spending discretion during a government shutdown, right

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Speaker 2: We've talked about this with Mick mulvaney along with a

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Speaker 2: lot of other people. The Office of Management and Budget

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Speaker 2: is in charge at that point, and they start using

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Speaker 2: the money they have to operate the agencies they have,

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Speaker 2: So park that right here as Democrats think about maybe

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Speaker 2: voting no on this and then consider what's about to

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Speaker 2: happen to d C, the District of Columbia, the federal city.

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Speaker 2: You come here, you hang around, go to the Smithsonian,

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Speaker 2: enjoy time with your family. Look at the cherry blossoms

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Speaker 2: every spring. Well, real people actually live here, and of

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Speaker 2: course they do not get a vote in Congress. That's

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Speaker 2: where things get complicated because this budget plan, this stop gap,

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Speaker 2: the way it's written, basically turns DC into a federal

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Speaker 2: agency and dramatically cut suspending to the tune of like

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Speaker 2: a billion dollars. Which is why we're already hearing threats

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Speaker 2: by the mayor, not threats, warnings that hey, we may

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Speaker 2: need to start firing teachers and police officers if this

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Speaker 2: goes through. This is one of the reasons why Democrats

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Speaker 2: say they want to vote no. Nobody put a finer

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Speaker 2: point on this than Brad Howard, the Democratic strategist. You

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Speaker 2: hear about a lot here or here from a lot

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Speaker 2: on Balance of Power. He was on the late edition

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Speaker 2: from Corkorann Street Group. Here's what he said.

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Speaker 7: This money, they can't be used, this money to calculate savings.

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Speaker 7: This money can't be used for the federal government.

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Speaker 4: It is our money.

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Speaker 7: Essentially, what does it gets diverted away from us for

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Speaker 7: six months and then they figure out later what happens.

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Speaker 7: So it doesn't even calculate savings. So we're trying to

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Speaker 7: figure out what happened here why. It just seems hopefully

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Speaker 7: it's not just a mean spirited attempt to thumber knows

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Speaker 7: at a democratic jurisdiction. But I don't know how else

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Speaker 7: to read it.

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Speaker 2: So wait a minute. This money is from people who

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Speaker 2: live in the District of Columbia and it's going to

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Speaker 2: go somewhere else. That's what Brad is saying, and that's

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Speaker 2: the prospect we're looking at. If you're listening to us

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Speaker 2: right now on ninety nine to one in Washington, d C,

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Speaker 2: you probably know this. And what they're saying is, Hey,

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Speaker 2: make that happen. You get an instant recession in DC

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Speaker 2: and right around the whole DMV, Yes, the DMV district Maryland,

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Speaker 2: Virginia said to be recession proof. This is what Tazra

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Speaker 2: Mitchell has been working on. She's Chief Policy and strategy

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Speaker 2: Officer at the DC Fiscal Policy Institute, Where Tasra, I'm

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Speaker 2: guessing the house is on fire. Is this really about

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Speaker 2: to happen?

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Speaker 8: Well, we hope that the Senate Democrats will ensure that

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Speaker 8: DC gets suspend its own money. This extreme act of

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Speaker 8: federal interference will negatively impact basic government services that we

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Speaker 8: all rely on, from childcare to nine one one, touching

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Speaker 8: every DC resident, and we are really leaning on them

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Speaker 8: to prevent us from going into place.

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Speaker 2: What can be done other than Democrats voting now?

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Speaker 8: So, unfortunately DC lacks the power of statehood. We should

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Speaker 8: have it, but we do not, so we are subject

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Speaker 8: to Congressional review of all of our legislation, including our

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Speaker 8: our own budget. DC has had a balanced budget for twenty

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Speaker 8: eight consecutive years with clean audits. Unlike the federal government,

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Speaker 8: we have to balance our budget. We have these one

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Speaker 8: billion dollars in revenues, and all we really need is

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Speaker 8: for Congress to let us spend our money the way

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Speaker 8: that we see fit and give us the same autonomy

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Speaker 8: that localities across the country have. So what we're asking

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Speaker 8: them to do is to ensure that whatever continuing resolution

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Speaker 8: that goes through allows DC to spend its own resources

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Speaker 8: as we see fit, including sticking with twenty twenty five

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Speaker 8: current budget levels, because if they fail to do that,

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Speaker 8: we're going to see layoffs of police, layoffs of firefighters, teachers,

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Speaker 8: all of our workers that help run our city and

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Speaker 8: keep us safe, which I think should be a top

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Speaker 8: priority for both Republicans and Senate Democrats.

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Speaker 2: So it's important what you just said here, this is

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Speaker 2: money that is actually raised from people who live in

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Speaker 2: the districts of Columbia, or that it's not coming from Kansas, California,

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Speaker 2: or Connecticut. Is the point here, right, So if it's

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Speaker 2: money from the city, you're saying it should stay in

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Speaker 2: the city. The problem is DC doesn't have a vote,

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Speaker 2: which is why since the year two thousand, if you

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Speaker 2: ever look at the license plate in Washington, DC, it

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Speaker 2: says taxation without representation. It brings up the whole argument

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Speaker 2: over home rule here, Tazra. And this could end up

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Speaker 2: being a pretty difficult period for the district. Would it

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Speaker 2: cause a recession?

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Speaker 9: It could very.

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Speaker 8: Well cause our We're already actually projected to face a

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Speaker 8: mob recession in the district because of Trump's federal layoffs.

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Speaker 8: Our own chief financial officer is already saying that our

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Speaker 8: revenues are going to plummet by a billion dollars over

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Speaker 8: the next four years just because of federal layoffs alone.

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Speaker 8: And now we have this additional billion dollar problem that

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Speaker 8: would harm our economy, small businesses, and make it harder

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Speaker 8: for everyday district residents to make ends meet. And as

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Speaker 8: you said earlier in the cliff, this will have have

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Speaker 8: repel effects on the entire region. So Maryland and Virginian residents.

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Speaker 8: Virginia residents will also be harmed by this reckless and

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Speaker 8: dramatic escalation among Republicans in Congress.

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Speaker 9: It's unnecessary function.

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Speaker 2: Ye, that's right. How does the city function if you

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Speaker 2: fire teachers police? You can't have nine to one to

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Speaker 2: one on the rest of it. What we're going to

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Speaker 2: live in mad Max for the next couple of years.

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Speaker 8: Well, this is unprecedented. I think the mayor would have

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Speaker 8: really hard choices to make that are forced upon her

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Speaker 8: something that she does not want to do. You know,

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Speaker 8: she said that we would have to cut a billion

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Speaker 8: dollars through September. That is about a sixteen percent cut

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Speaker 8: in our budget. That means probably thousands of fewer government

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Speaker 8: workers that are keeping our streets clean, that are educating

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Speaker 8: our children, that are making it safe for tours to

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Speaker 8: come and visit our great city. Just so many reppel effects.

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Speaker 8: And you know there are also looming federal cuts that

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Speaker 8: are that may also be coming our way that would

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Speaker 8: make it harder to put food on the table, care

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Speaker 8: for children, you know, just afford to live in the district.

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Speaker 8: And again, this is unnecessary. We have the revenue and

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Speaker 8: the bank. We are not projected to face a deficit.

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Speaker 8: This is just reckless. This is an overreach and again

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Speaker 8: just an attack on DC residents' rights as Americans in

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Speaker 8: this nation.

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Speaker 2: Well, there's a bit too that, Tazra, and I'm sure

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Speaker 2: that you can speak to the kind of resentment. Maybe

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Speaker 2: we'll start with the misunderstanding that people have around the

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Speaker 2: country of what DC is, who lives here, who's from here.

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Speaker 2: They picture this massive bureaucracy, a bunch of guys with

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Speaker 2: white shirts and skinny ties. They're not aware that there

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Speaker 2: is in fact a native community here in this city,

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Speaker 2: that things other than the federal government take place here.

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Speaker 2: But there's some truth to this resentments that people have

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Speaker 2: to DC, or sort of a lack of caring. I

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Speaker 2: think some people actually enjoy watching this, do you know?

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Speaker 8: I think that d C has a rich culture.

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Speaker 9: Go Go was born here.

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Speaker 8: We have great food, we have great community, and it's

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Speaker 8: just like anywhere else in the nation. We we raise

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Speaker 8: our children here, we look out for one another, and

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Speaker 8: we're doing our best to get by. And the last

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Speaker 8: thing that we need is Congression, the Congressional delegation. We

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Speaker 8: really probably don't even know DC all that well, and

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Speaker 8: explore the beauty of our culture coming in and making

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Speaker 8: demands without having an ounce of understanding about how we

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Speaker 8: run the district or how we you know, like what

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Speaker 8: our finances are used for. Again, we twenty eight years

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Speaker 8: in a row, we've had clean audits, and for over

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Speaker 8: twenty years, Congress has made the agreement with DC to

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Speaker 8: let us spend our money as we see fit and

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Speaker 8: part tact us during shutdowns and protect us during continuing resolutions.

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Speaker 8: It cost them zero dollars to continue that promise as

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Speaker 8: they pass this continuing resolution. And just today and yesterday

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Speaker 8: you're seeing hundreds of residents going down to the Senate

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Speaker 8: building and making their voices heard, and we hope that

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Speaker 8: Senate Democrats are listening to them as well as other

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Speaker 8: Senate Republicans. Again, it will not save them a single penny,

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Speaker 8: it will not cost them anything. They just have to

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Speaker 8: understand the suffering that they are going to be causing

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Speaker 8: on their neighboring residents in the district and again for

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Speaker 8: no real reason.

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Speaker 2: Yeah, you know, as Brad Howard pointed out last night,

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Speaker 2: a lot of the DC populations made up of congressional staffers,

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Speaker 2: the people who work for the lawmakers who are going

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Speaker 2: to be voting on this thing. Lawmakers may fly back

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Speaker 2: to another state on the weekends, but these people live here.

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Speaker 2: They're chiefs of staff right on down to the pages

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Speaker 2: on Capitol Hill. So this actually hits pretty close to

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Speaker 2: home to the families that they have in their own offices.

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Speaker 2: And I'd be deeply curious to hear what some of

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Speaker 2: those conversations are. Like, Tasra, I'm really glad you could

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Speaker 2: join us, and I appreciate your insights today. Tasra Mitchell,

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Speaker 2: chief policy strategy Officer at the DC Fiscal Policy Institute. Yeah,

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Speaker 2: we're in the bubble here, but this has repercussions certainly regionally.

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Speaker 2: If we talk about the beginnings of a recession nationally,

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Speaker 2: could it be rooted here in Washington. It's a different

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Speaker 2: story than we've probably told in the past. They've started

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Speaker 2: their conversation in the Oval Office, and as usual, you know,

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Speaker 2: the drill around here will bring you in for the

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Speaker 2: conversation a bit later between President Trump and NATO Secretary

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Speaker 2: General Ruda. I also want to mention an important conversation

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Speaker 2: we're going to bring you right here on Balance of

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Speaker 2: Power half an hour from right now, the former Treasury

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Speaker 2: Secretary Steve Manuchen sitting down with our own Salaia Mosen

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Speaker 2: here on Bloomberg. We'll set up our panel next their

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Speaker 2: insights on everything we're talking about. Jenny Shanzano and Lester

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Speaker 2: Munson are on the way in.

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Speaker 1: Right here on Bloomberg, you're listening to the Blue Work

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Speaker 1: Balance of Power podcast. Catch us live weekdays at noon

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Speaker 1: and five pm Eastern on Apple Coarclay and Android Auto

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Speaker 1: with the Bloomberg Business App. Listen on demand wherever you

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Speaker 1: get your podcasts, or watch us live on YouTube.

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Speaker 2: On the Thursday edition. Yeah, it's Little Friday, and we've

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Speaker 2: got our arms stretched around Washington here with activity on

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Speaker 2: both ends of Pennsylvania Avenue that require your attention here.

436
00:22:24,560 --> 00:22:26,840
Speaker 2: As Charlie mentioned, we're going to have to start warming

437
00:22:26,920 --> 00:22:30,240
Speaker 2: up to the California Pino and cab all over again

438
00:22:30,320 --> 00:22:33,480
Speaker 2: because the wine from the other side of the Atlantic

439
00:22:33,520 --> 00:22:35,560
Speaker 2: may be about to get a lot more expensive two

440
00:22:35,640 --> 00:22:36,760
Speaker 2: hundred percent terriffs.

441
00:22:36,800 --> 00:22:37,920
Speaker 4: As the president.

442
00:22:39,040 --> 00:22:43,720
Speaker 2: On your Kianti, you're Brunello de Montalcino. You're faquarashigunda and

443
00:22:43,760 --> 00:22:46,600
Speaker 2: shots enough to pop. So hey, look at the bright side.

444
00:22:46,640 --> 00:22:50,480
Speaker 2: There's a meeting tomorrow, as we just heard, Trump White

445
00:22:50,480 --> 00:22:54,440
Speaker 2: House meeting with the EU Trade Commissioner magically on Friday,

446
00:22:54,760 --> 00:22:58,359
Speaker 2: knowing that reciprocal tariffs are set to take effect on

447
00:22:58,440 --> 00:23:00,600
Speaker 2: April second. This is all going to be part of

448
00:23:00,640 --> 00:23:02,840
Speaker 2: a special conversation that we have coming up for you

449
00:23:03,480 --> 00:23:06,440
Speaker 2: in about twenty minutes time with the former Treasury Secretary

450
00:23:06,480 --> 00:23:09,360
Speaker 2: Steve Manucin. You'll hear it live right here on Bloomberg

451
00:23:09,400 --> 00:23:13,680
Speaker 2: TV and Radio. In the meantime, we're watching the process

452
00:23:13,760 --> 00:23:16,760
Speaker 2: unfold on Capitol Hill that what we have been told

453
00:23:16,760 --> 00:23:19,360
Speaker 2: on a daily basis would not result in a government shutdown.

454
00:23:19,960 --> 00:23:22,160
Speaker 2: Now we're told the odds are rising on a shutdown.

455
00:23:22,160 --> 00:23:23,920
Speaker 2: We're gonna have to bump into Nathan Deane and see

456
00:23:23,920 --> 00:23:27,000
Speaker 2: where a BI is on this, because things got a

457
00:23:27,000 --> 00:23:30,400
Speaker 2: lot more complicated late yesterday. Chuck Schumer says Democrats are

458
00:23:30,440 --> 00:23:31,919
Speaker 2: not playing ball, and a lot of it has to

459
00:23:31,960 --> 00:23:34,800
Speaker 2: do with the conversation that we just had with Tazra Mitchell.

460
00:23:34,840 --> 00:23:37,359
Speaker 2: The cuts that are happening here in Washington, d C.

461
00:23:37,600 --> 00:23:40,600
Speaker 2: The District of Columbia, as well as the DOGE cuts

462
00:23:40,640 --> 00:23:44,920
Speaker 2: at large. In many cases, the White House not spending

463
00:23:45,000 --> 00:23:51,000
Speaker 2: money that was allocated and passed by Congress. So Chuck

464
00:23:51,040 --> 00:23:53,239
Speaker 2: Schumer says Democrats have had it here he is from

465
00:23:53,320 --> 00:23:53,800
Speaker 2: last night.

466
00:23:54,640 --> 00:23:58,040
Speaker 10: Funding the government should be a bypart is an effort,

467
00:23:58,720 --> 00:24:04,440
Speaker 10: but Republicans chose a partisan path, drafting their Continuing Resolution

468
00:24:04,560 --> 00:24:10,119
Speaker 10: without any input, any input from Congressional Democrats. Because of that,

469
00:24:11,040 --> 00:24:14,480
Speaker 10: Republicans do not have the votes in the Senate to

470
00:24:14,600 --> 00:24:17,440
Speaker 10: invoke cloture on the House cr.

471
00:24:18,720 --> 00:24:22,119
Speaker 2: Yeah, the math is tough. John Thune, who filed for

472
00:24:22,200 --> 00:24:24,920
Speaker 2: cloture last night and has an actual cloture vote scheduled

473
00:24:24,920 --> 00:24:30,639
Speaker 2: for tomorrow, needs at least at least seven Democrats to

474
00:24:30,720 --> 00:24:34,160
Speaker 2: make this work. We're watching you, Ran Paul, as well

475
00:24:34,200 --> 00:24:37,320
Speaker 2: as our panel. Genie Shanzano is with us right now,

476
00:24:37,400 --> 00:24:41,280
Speaker 2: our Democratic strategist of course, Bloomberg Politics contributor and senior

477
00:24:41,320 --> 00:24:43,280
Speaker 2: Democracy Fellow for the Center of the Study of the

478
00:24:43,280 --> 00:24:46,360
Speaker 2: Presidency in Congress, and great to have Lester back. He's

479
00:24:46,440 --> 00:24:48,680
Speaker 2: been around the world since We've last spoke Lester months

480
00:24:48,680 --> 00:24:51,760
Speaker 2: in principle of the international practice at BGR group are

481
00:24:51,760 --> 00:24:54,119
Speaker 2: Republican strategists. Great to see both of you here, Genie,

482
00:24:54,119 --> 00:24:57,399
Speaker 2: is this real Democrats gonna sit on their hands this weekend?

483
00:24:58,960 --> 00:24:59,679
Speaker 9: I don't know.

484
00:25:00,000 --> 00:25:02,560
Speaker 11: I have to say, I hope not. I mean, this

485
00:25:02,840 --> 00:25:06,440
Speaker 11: is the Hobson's choice of all time for the Democrats.

486
00:25:06,480 --> 00:25:10,840
Speaker 11: There is no good option. So I am empathetic to

487
00:25:10,880 --> 00:25:15,199
Speaker 11: the position they find themselves in. They refeel strongly that

488
00:25:15,280 --> 00:25:17,639
Speaker 11: this is a chance to push back on what is

489
00:25:17,680 --> 00:25:20,040
Speaker 11: happening with DOJE and you just talked about this, what

490
00:25:20,160 --> 00:25:22,840
Speaker 11: the president is doing and all of that, and obviously

491
00:25:22,840 --> 00:25:24,280
Speaker 11: they're out of power, so they don't get a lot

492
00:25:24,320 --> 00:25:25,160
Speaker 11: of opportunities.

493
00:25:25,720 --> 00:25:28,000
Speaker 9: But that said, I'm hoping they.

494
00:25:27,960 --> 00:25:32,400
Speaker 11: Resist the temptation because shutting down the government now would

495
00:25:32,440 --> 00:25:35,480
Speaker 11: be a political win for Donald Trump and a disaster

496
00:25:35,640 --> 00:25:39,640
Speaker 11: for Democrats because there's nothing at the back end for them,

497
00:25:39,960 --> 00:25:44,320
Speaker 11: particularly this ridiculousness of a thirty day cr So I

498
00:25:44,359 --> 00:25:47,320
Speaker 11: hope they resist the temptation. I'm not sure they're going

499
00:25:47,359 --> 00:25:51,480
Speaker 11: to be able to do that because they are so frustrated.

500
00:25:51,840 --> 00:25:54,400
Speaker 2: As usual, Genie reaches for the news. This is what's

501
00:25:54,440 --> 00:25:56,600
Speaker 2: going on here. Democrats are going to put up an

502
00:25:56,600 --> 00:26:02,080
Speaker 2: amendment their own CR proposal that would extend government funding

503
00:26:02,119 --> 00:26:05,919
Speaker 2: through April eleventh. That'd be the one month CR here. Lester,

504
00:26:06,560 --> 00:26:09,760
Speaker 2: I know that you have a sense of humor. Is

505
00:26:09,800 --> 00:26:11,879
Speaker 2: this a joke here or are we talking about a

506
00:26:11,920 --> 00:26:12,840
Speaker 2: government shutdown?

507
00:26:14,640 --> 00:26:18,080
Speaker 12: I don't think it's a joke, although Janie's comments, Wow,

508
00:26:19,680 --> 00:26:20,080
Speaker 12: I didn't.

509
00:26:20,240 --> 00:26:20,600
Speaker 13: I think that.

510
00:26:20,800 --> 00:26:25,480
Speaker 12: I think the thirty the thirty day extension is a

511
00:26:25,920 --> 00:26:28,720
Speaker 12: is not a joke. It's an interesting option for Democrats.

512
00:26:29,240 --> 00:26:31,840
Speaker 12: And you know what I'm what I'm hearing from my

513
00:26:31,960 --> 00:26:35,439
Speaker 12: sources up on the hill, particularly with that crowd, is

514
00:26:36,520 --> 00:26:39,760
Speaker 12: they may they want to not give Trump a win here,

515
00:26:39,760 --> 00:26:42,359
Speaker 12: but they when push comes to shove on the actual vote,

516
00:26:42,400 --> 00:26:44,000
Speaker 12: they don't want to be the ones who are closing

517
00:26:44,000 --> 00:26:46,359
Speaker 12: the government. And so so I think I'm I'm right

518
00:26:46,400 --> 00:26:49,240
Speaker 12: where Genie is. I think you what you could see

519
00:26:49,280 --> 00:26:54,240
Speaker 12: here is an interesting sequencing of the votes for Democrats.

520
00:26:54,320 --> 00:26:56,399
Speaker 12: One of the things Republicans could do for them is,

521
00:26:56,600 --> 00:26:58,520
Speaker 12: all right, we'll give you a little vote here to

522
00:26:58,600 --> 00:27:01,320
Speaker 12: show that you don't don't really want the full year.

523
00:27:01,520 --> 00:27:04,600
Speaker 12: You can vote on a thirty day, but then we're

524
00:27:04,680 --> 00:27:08,000
Speaker 12: after that, we're going to vote on the full extension

525
00:27:08,000 --> 00:27:09,760
Speaker 12: of the CR for the rest of the fiscal year,

526
00:27:09,840 --> 00:27:11,479
Speaker 12: and we're going to need you to vote yet, at

527
00:27:11,560 --> 00:27:13,159
Speaker 12: least a few of you to vote yes on that,

528
00:27:13,280 --> 00:27:14,800
Speaker 12: and that might be a nice way out of the

529
00:27:14,840 --> 00:27:17,879
Speaker 12: wilderness here for everybody.

530
00:27:18,080 --> 00:27:21,720
Speaker 2: Did you just put up a countdown clock, James, if

531
00:27:21,720 --> 00:27:24,440
Speaker 2: you're with us on YouTube, Genie does a countdown clock

532
00:27:24,480 --> 00:27:25,000
Speaker 2: in front of you?

533
00:27:25,040 --> 00:27:25,200
Speaker 10: Now?

534
00:27:25,359 --> 00:27:27,840
Speaker 2: Are we the first to get the countdown clock? You

535
00:27:27,880 --> 00:27:31,080
Speaker 2: know what that means? We're really going to have to

536
00:27:31,080 --> 00:27:33,320
Speaker 2: get odds on this thing, Jeanie. Look at this right now,

537
00:27:33,320 --> 00:27:36,560
Speaker 2: they're counting down to a government shutdown. If it happens

538
00:27:36,560 --> 00:27:38,480
Speaker 2: over the weekend, it's not real, right. If this is

539
00:27:38,480 --> 00:27:39,920
Speaker 2: like a two day thing and they get it back

540
00:27:39,920 --> 00:27:43,439
Speaker 2: together by Monday, what qualifies as a shutdown? And I

541
00:27:43,480 --> 00:27:47,040
Speaker 2: ask you that knowing that a lot of Democrats believe

542
00:27:47,160 --> 00:27:49,960
Speaker 2: if the government shuts down, many agencies will never reopen

543
00:27:50,000 --> 00:27:51,480
Speaker 2: as long as Elon Musk is in town.

544
00:27:52,480 --> 00:27:53,040
Speaker 9: Well, that's right.

545
00:27:53,119 --> 00:27:55,679
Speaker 11: First of all, how great it is when producer James

546
00:27:55,760 --> 00:27:57,800
Speaker 11: is in New York and he can put up countdown

547
00:27:57,800 --> 00:27:59,320
Speaker 11: clocks off these cools.

548
00:28:00,000 --> 00:28:00,399
Speaker 9: I love it.

549
00:28:01,480 --> 00:28:04,760
Speaker 11: You know there is a chance we do see and

550
00:28:04,760 --> 00:28:07,680
Speaker 11: we've always talked about this a very minimal, short term

551
00:28:07,760 --> 00:28:11,160
Speaker 11: shut down. Now obviously it has impact, it's not quite

552
00:28:11,160 --> 00:28:13,280
Speaker 11: as broad as if we saw a huge one.

553
00:28:14,359 --> 00:28:14,600
Speaker 13: You know.

554
00:28:15,040 --> 00:28:17,879
Speaker 11: The reality though, is this is why this is a

555
00:28:17,920 --> 00:28:21,680
Speaker 11: Hobson's choice for Democrats if they shut down the government.

556
00:28:21,720 --> 00:28:24,240
Speaker 11: And I'm not just talking politically. Of course, they'll be

557
00:28:24,280 --> 00:28:28,760
Speaker 11: blamed by the Trump administration what's new, But the reality

558
00:28:28,840 --> 00:28:32,399
Speaker 11: is they're giving those exactly what they want. And this

559
00:28:32,560 --> 00:28:35,600
Speaker 11: is one of the things we heard from Hickenlooper and

560
00:28:35,960 --> 00:28:38,840
Speaker 11: others saying, and you just talked about this, Joe, then

561
00:28:39,000 --> 00:28:42,120
Speaker 11: he gets to do what he wants to do. He's

562
00:28:42,160 --> 00:28:45,640
Speaker 11: going to decide what's essential and so, which really means

563
00:28:45,720 --> 00:28:48,400
Speaker 11: Elon Musk will be doing it with him. So from

564
00:28:48,480 --> 00:28:51,680
Speaker 11: so many perspective, this is not good strategy, is not

565
00:28:51,760 --> 00:28:53,719
Speaker 11: good governing, It is not good politics.

566
00:28:54,000 --> 00:28:56,280
Speaker 9: And boy, oh boy, it's so fun.

567
00:28:56,040 --> 00:28:58,760
Speaker 11: To be on with Lester, but can he please agree

568
00:28:58,760 --> 00:29:01,200
Speaker 11: with me that that vote us described is the.

569
00:29:01,240 --> 00:29:04,800
Speaker 9: Epitome of political nonsense. Theater. We're going to give you

570
00:29:04,840 --> 00:29:07,160
Speaker 9: a vote and we all know it's not going to pass.

571
00:29:07,200 --> 00:29:09,680
Speaker 9: Wink wink wink. Then you cant this and then we

572
00:29:09,720 --> 00:29:10,640
Speaker 9: go off for vacation.

573
00:29:10,920 --> 00:29:13,800
Speaker 11: I mean, that is what is probably not going to

574
00:29:13,840 --> 00:29:17,320
Speaker 11: satisfy anybody, including the Democratic base. So I don't know

575
00:29:17,400 --> 00:29:20,240
Speaker 11: why they would do that, but they may very well

576
00:29:20,280 --> 00:29:20,920
Speaker 11: do just what.

577
00:29:20,960 --> 00:29:24,240
Speaker 2: Lester's pull usit off the ledge Lester.

578
00:29:25,240 --> 00:29:26,200
Speaker 13: Any, Yeah, I don't.

579
00:29:26,440 --> 00:29:27,840
Speaker 12: I don't know if you've noticed this or not, but

580
00:29:27,960 --> 00:29:31,200
Speaker 12: there's a lot of theater happening in politics lately, and

581
00:29:31,760 --> 00:29:34,560
Speaker 12: I think it's about time Democrats started to embrace the

582
00:29:34,640 --> 00:29:38,120
Speaker 12: concept and fight on the same kind of battlefield that

583
00:29:38,120 --> 00:29:40,720
Speaker 12: that Trump is on. Where's he's really running away with it.

584
00:29:40,880 --> 00:29:42,280
Speaker 12: They need to figure out how to get up on

585
00:29:42,440 --> 00:29:45,240
Speaker 12: get up there and do the same kind of rasthmotask

586
00:29:45,320 --> 00:29:47,320
Speaker 12: and maybe you know this is this is a really

587
00:29:47,400 --> 00:29:50,320
Speaker 12: nerdy thing to get out of this. But they need

588
00:29:50,400 --> 00:29:52,800
Speaker 12: some sort of fig leaf, some way to show, hey,

589
00:29:52,800 --> 00:29:54,840
Speaker 12: we're not really with this guy, but also we don't

590
00:29:54,840 --> 00:29:57,280
Speaker 12: want to shut down the government. That I think people

591
00:29:57,320 --> 00:29:59,520
Speaker 12: will understand a little bit. And if you need to

592
00:29:59,520 --> 00:30:02,720
Speaker 12: do a little you know, two step on the floor

593
00:30:02,720 --> 00:30:03,880
Speaker 12: of the Senate, that's okay with me.

594
00:30:05,160 --> 00:30:06,920
Speaker 2: All right, we can do the Texas two step. We

595
00:30:06,960 --> 00:30:08,480
Speaker 2: do have a little bit of breaking news. I need

596
00:30:08,520 --> 00:30:11,560
Speaker 2: to mention here, Genie, this is important and it will

597
00:30:11,560 --> 00:30:14,400
Speaker 2: be a big story as this develops later on today.

598
00:30:14,440 --> 00:30:16,840
Speaker 2: Something you're going to hear a lot about federal agencies

599
00:30:17,000 --> 00:30:22,520
Speaker 2: must rehire the probationary workers who were fired by the DOGE.

600
00:30:23,080 --> 00:30:25,760
Speaker 2: This is coming from a federal judge in San Francisco

601
00:30:25,920 --> 00:30:28,920
Speaker 2: ordering the Trump administration Bloomberg Laws the first to get

602
00:30:28,920 --> 00:30:33,520
Speaker 2: to it to rehire thousands of the government's newest employees

603
00:30:33,600 --> 00:30:36,600
Speaker 2: terminated in early February. Genie, these are the same people

604
00:30:36,640 --> 00:30:39,400
Speaker 2: who are in many cases locked out of their computers,

605
00:30:39,480 --> 00:30:43,400
Speaker 2: fired by email or voicemail, not allowed back in the building.

606
00:30:44,160 --> 00:30:49,240
Speaker 2: This requires the VA Department of Energy, Interior, Agriculture, Treasury

607
00:30:49,320 --> 00:30:53,360
Speaker 2: to rehire the fired employees. Once again, Genie, the court

608
00:30:53,520 --> 00:30:54,960
Speaker 2: is the check on the administration.

609
00:30:56,440 --> 00:30:57,680
Speaker 9: That's absolutely right.

610
00:30:57,960 --> 00:31:00,640
Speaker 11: And you know, this has been the story of what

611
00:31:00,680 --> 00:31:03,560
Speaker 11: we've seen so far with DOGE is they have just

612
00:31:04,160 --> 00:31:08,040
Speaker 11: you know, gone with this chainsaw through cutting the people

613
00:31:08,080 --> 00:31:10,760
Speaker 11: that they could as easily as they could with the

614
00:31:10,800 --> 00:31:14,760
Speaker 11: probationary workers. Unfortunately, and then you have the court stepping

615
00:31:14,760 --> 00:31:18,160
Speaker 11: in and saying that is you know, unconstitutional, illegal, They

616
00:31:18,240 --> 00:31:21,760
Speaker 11: must be hired back. And you know, imagine if DOGE

617
00:31:21,880 --> 00:31:25,920
Speaker 11: had been well prepared to do what we all need

618
00:31:26,040 --> 00:31:29,200
Speaker 11: no needs to be done, which is to make smart

619
00:31:29,360 --> 00:31:32,200
Speaker 11: cuts to these agencies, and to do it in a

620
00:31:32,200 --> 00:31:36,200
Speaker 11: way that it increased efficiency, it increased responsiveness, it saved money.

621
00:31:36,480 --> 00:31:39,800
Speaker 11: Instead to go and just cut people because they were

622
00:31:39,800 --> 00:31:42,800
Speaker 11: the last hired makes no sense. I mean, all of

623
00:31:42,880 --> 00:31:45,400
Speaker 11: us know it's not usually the last person who is

624
00:31:45,480 --> 00:31:48,840
Speaker 11: hired who's not being effective. Sometimes it's the person who's

625
00:31:48,840 --> 00:31:51,400
Speaker 11: been there for forty years who's not being effective. So

626
00:31:51,520 --> 00:31:54,360
Speaker 11: that is no mark of getting rid of people who

627
00:31:54,360 --> 00:31:58,440
Speaker 11: are inefficient. So from every perspective, this is such important news.

628
00:31:58,440 --> 00:32:01,360
Speaker 11: And of course, to your point, the third branch stepping

629
00:32:01,440 --> 00:32:03,800
Speaker 11: up to do what it needs to do, which is

630
00:32:04,080 --> 00:32:06,760
Speaker 11: to hold the administration's feet to the fire when it

631
00:32:06,800 --> 00:32:10,120
Speaker 11: comes to respecting the laws and the Constitution of the

632
00:32:10,200 --> 00:32:12,400
Speaker 11: United States in doing its work.

633
00:32:13,640 --> 00:32:16,440
Speaker 2: Leicester weighing on the ruling to the extent that you

634
00:32:16,520 --> 00:32:18,960
Speaker 2: want to. But I'm kind of curious your reaction that

635
00:32:19,040 --> 00:32:21,480
Speaker 2: we're seeing in the financial markets to all of the

636
00:32:21,520 --> 00:32:25,640
Speaker 2: activities of the DOGE, combined with the confusion over tariffs.

637
00:32:25,960 --> 00:32:29,760
Speaker 2: We're selling off again here. The SMP's down another one percent.

638
00:32:30,480 --> 00:32:32,520
Speaker 2: The Nasdaq is down one and a half percent. We're

639
00:32:32,520 --> 00:32:35,120
Speaker 2: getting closer to fifty five hundred on the S and

640
00:32:35,160 --> 00:32:38,520
Speaker 2: P five hundred. I mean, we're beyond round tripping, as

641
00:32:38,520 --> 00:32:40,760
Speaker 2: you know, to before election day. What do you make

642
00:32:40,800 --> 00:32:43,920
Speaker 2: of this visceral reaction to the rhetoric out of Washington.

643
00:32:44,920 --> 00:32:47,040
Speaker 12: Well, I think we're I think we're seeing that little

644
00:32:47,080 --> 00:32:51,720
Speaker 12: Trump bubble from late January early February popping and just

645
00:32:51,760 --> 00:32:55,440
Speaker 12: after the election like so that's that's gone. I think

646
00:32:55,480 --> 00:32:58,960
Speaker 12: this is largely about the tariffs and the confusion and

647
00:32:59,000 --> 00:33:02,040
Speaker 12: the back and forth, the uncertainty. It's hard for businesses

648
00:33:02,080 --> 00:33:06,240
Speaker 12: to plan. I mean, it's a crazy situation. I think

649
00:33:06,280 --> 00:33:10,240
Speaker 12: to these to the to the Doge spending cuts issue,

650
00:33:10,720 --> 00:33:13,280
Speaker 12: I have I have a different take here, I think

651
00:33:13,280 --> 00:33:13,960
Speaker 12: than Genie.

652
00:33:14,080 --> 00:33:16,880
Speaker 13: I think this is and I do hope I.

653
00:33:16,840 --> 00:33:19,640
Speaker 12: Think like she does that in the long run, there

654
00:33:19,680 --> 00:33:22,960
Speaker 12: is an intelligent process here that is thought out and

655
00:33:22,960 --> 00:33:24,520
Speaker 12: things about the things that we actually need to do

656
00:33:24,560 --> 00:33:25,880
Speaker 12: and how we can do them in a more cost

657
00:33:25,880 --> 00:33:26,560
Speaker 12: effective way.

658
00:33:26,600 --> 00:33:28,560
Speaker 13: And that's good. That needs to happen.

659
00:33:28,560 --> 00:33:31,000
Speaker 12: It's probably going to be led by Omb and Congress

660
00:33:31,040 --> 00:33:34,400
Speaker 12: going forward, rather than than Dogetho Doge can.

661
00:33:34,280 --> 00:33:34,760
Speaker 13: Play a role.

662
00:33:34,880 --> 00:33:37,920
Speaker 12: But I think what for the last few weeks with this,

663
00:33:38,520 --> 00:33:42,720
Speaker 12: what the Doge process has done has enabled the President

664
00:33:42,840 --> 00:33:46,840
Speaker 12: to get the cr through the House. It's distracted the

665
00:33:46,880 --> 00:33:51,480
Speaker 12: Freedom Caucus, the real fiscal conservatives from the actual situation

666
00:33:51,600 --> 00:33:55,800
Speaker 12: with respect to the budget. The Doge cuts don't actually

667
00:33:55,840 --> 00:33:59,000
Speaker 12: result in any taxpayer savings. The money is still there

668
00:34:00,360 --> 00:34:03,080
Speaker 12: that's going through basically keeps funding at a at a

669
00:34:03,200 --> 00:34:05,960
Speaker 12: level you know, at a at a at a straight

670
00:34:06,000 --> 00:34:08,000
Speaker 12: line going into the for the rest of the year,

671
00:34:08,239 --> 00:34:12,040
Speaker 12: and even these budget resolutions that Congress is about to consider,

672
00:34:12,080 --> 00:34:17,480
Speaker 12: what the reconciliation process, talk show discussionary spending not going

673
00:34:17,520 --> 00:34:20,520
Speaker 12: down over time. So there's like the real risk for

674
00:34:20,560 --> 00:34:23,239
Speaker 12: Trump here is the fiscal conservatives that they're going to

675
00:34:23,280 --> 00:34:26,080
Speaker 12: bail out on his program, and he's using the Doge cuts.

676
00:34:25,800 --> 00:34:27,560
Speaker 13: To kind of keep them on side.

677
00:34:27,800 --> 00:34:30,120
Speaker 12: It's a little bit of a magic act where he's

678
00:34:30,600 --> 00:34:33,160
Speaker 12: he's doing the Doge as kind of the distraction while

679
00:34:33,160 --> 00:34:35,680
Speaker 12: on the while you're not looking on the other side,

680
00:34:35,719 --> 00:34:37,920
Speaker 12: he's passing all these things through the Hill and getting

681
00:34:37,920 --> 00:34:39,080
Speaker 12: Freedom Caucus to vote for him.

682
00:34:39,160 --> 00:34:41,600
Speaker 2: Yeah, we're going to keep doing the Doughe with laster

683
00:34:41,680 --> 00:34:44,640
Speaker 2: months and Jeanie Shanzo. Our panel will stay with us

684
00:34:45,120 --> 00:34:47,279
Speaker 2: in our second hour, and as I mentioned, we'll bring

685
00:34:47,320 --> 00:34:49,680
Speaker 2: you a conversation about all of this with the former

686
00:34:49,680 --> 00:34:52,920
Speaker 2: Treasury Secretary Stephen Minuchin is going to be sitting down

687
00:34:52,960 --> 00:34:56,400
Speaker 2: with Bloomberg Salia Mosen right here in our studios in Washington.

688
00:34:56,480 --> 00:34:59,200
Speaker 2: So stay with us as we welcome our global television

689
00:34:59,239 --> 00:35:02,000
Speaker 2: audience to the common coming up as well here on

690
00:35:02,040 --> 00:35:05,000
Speaker 2: the fastest show in politics.

691
00:35:06,000 --> 00:35:09,479
Speaker 1: You're listening to the Bloomberg Balance of Power Podcast. Catch

692
00:35:09,560 --> 00:35:13,000
Speaker 1: us live weekdays at noon and five pm Eastern on Apple,

693
00:35:13,040 --> 00:35:16,080
Speaker 1: Cocklay and Android Auto with the Bloomberg Business App. You

694
00:35:16,120 --> 00:35:19,600
Speaker 1: can also listen live on Amazon Alexa from our flagship

695
00:35:19,640 --> 00:35:23,560
Speaker 1: New York station Just Say Alexa played Bloomberg eleven thirty.

696
00:35:25,040 --> 00:35:28,520
Speaker 14: We bring you an important conversation as here in Washington,

697
00:35:28,600 --> 00:35:31,400
Speaker 14: d C. The former US Treasury Secretary Steve Mnuchen is

698
00:35:31,440 --> 00:35:33,800
Speaker 14: sitting down with our colleague Salia moson Sealia.

699
00:35:34,680 --> 00:35:38,319
Speaker 15: Thanks, Kaylie. We have Treasure Secretary Stephen Mnushan with us here.

700
00:35:38,360 --> 00:35:39,400
Speaker 15: Thank you so much for joining.

701
00:35:39,640 --> 00:35:41,840
Speaker 6: Thank you, it's great to be here with you.

702
00:35:41,840 --> 00:35:44,920
Speaker 15: You have a unique insight into this administration because you

703
00:35:45,040 --> 00:35:48,520
Speaker 15: served all four years during the first term for President Trump.

704
00:35:49,040 --> 00:35:51,080
Speaker 15: I wonder what you make of a difference that we're

705
00:35:51,120 --> 00:35:54,040
Speaker 15: seeing with Trump this time around. He is a little

706
00:35:54,120 --> 00:35:57,800
Speaker 15: less concerned about day to day market swings. We've seen

707
00:35:57,960 --> 00:36:00,959
Speaker 15: big tear of talk two hundred percent. He's twenty five percent,

708
00:36:01,080 --> 00:36:03,600
Speaker 15: ten percent across the board, and the S and P

709
00:36:03,680 --> 00:36:06,920
Speaker 15: five hundred has wiped out five trillion dollars in part

710
00:36:07,000 --> 00:36:09,720
Speaker 15: because of this. What do you make in the shift

711
00:36:09,880 --> 00:36:12,360
Speaker 15: in Trump's thinking about markets.

712
00:36:12,920 --> 00:36:15,640
Speaker 6: I think the execution is slightly different, but I think

713
00:36:15,719 --> 00:36:19,040
Speaker 6: the fundamental economic policies are actually the same. And this

714
00:36:19,080 --> 00:36:22,520
Speaker 6: goes back to what the President campaigned on in twenty sixteen.

715
00:36:23,280 --> 00:36:26,440
Speaker 6: Tax cuts, regulatory relief, and trade, and those are the

716
00:36:26,480 --> 00:36:29,680
Speaker 6: same things you're hearing about today. I would say it's

717
00:36:29,680 --> 00:36:32,680
Speaker 6: critically important that the tax cuts are extended, and I

718
00:36:32,719 --> 00:36:36,439
Speaker 6: know President Trump wants to add additional tax cuts. He's

719
00:36:36,480 --> 00:36:40,200
Speaker 6: always been very focused on trade. I think that you're

720
00:36:40,239 --> 00:36:45,040
Speaker 6: seeing a more aggressive trade policy in this administration, and

721
00:36:45,080 --> 00:36:47,840
Speaker 6: I think one of the questions is does the President

722
00:36:47,880 --> 00:36:50,000
Speaker 6: want to use this to negotiate or does he want

723
00:36:50,040 --> 00:36:53,080
Speaker 6: to use this to raise tariff revenue, which he's talked

724
00:36:53,080 --> 00:36:56,640
Speaker 6: about significantly which if he's going to do that and

725
00:36:56,800 --> 00:36:59,759
Speaker 6: use that to create tax cuts or pay down debt,

726
00:37:00,120 --> 00:37:05,560
Speaker 6: is an interesting strategy for effectively creating a consumption tax

727
00:37:05,640 --> 00:37:06,560
Speaker 6: on foreign goods.

728
00:37:07,400 --> 00:37:10,720
Speaker 15: Do you think that some of the tariff threats pulling

729
00:37:10,719 --> 00:37:12,879
Speaker 15: things back bringing them back up, Do you think that's

730
00:37:12,880 --> 00:37:13,640
Speaker 15: a good policy.

731
00:37:14,480 --> 00:37:17,720
Speaker 6: Well, I think the market is adjusting to his negotiating,

732
00:37:17,840 --> 00:37:21,160
Speaker 6: which I think in the beginning the market thought that

733
00:37:21,239 --> 00:37:24,839
Speaker 6: he wasn't serious about tariffs, despite the fact that I

734
00:37:24,880 --> 00:37:28,200
Speaker 6: think and I've been saying, he's very serious about tariffs.

735
00:37:28,200 --> 00:37:32,240
Speaker 6: So I've suggested that if he wants to raise revenue,

736
00:37:32,320 --> 00:37:35,919
Speaker 6: a ten percent tariff across the board on everything would

737
00:37:35,920 --> 00:37:39,480
Speaker 6: be very effective. They could score that as part of reconciliation,

738
00:37:40,080 --> 00:37:42,360
Speaker 6: probably raise about two and a half trillion dollars, and

739
00:37:42,400 --> 00:37:45,240
Speaker 6: that would be very effective in terms of creating tax

740
00:37:45,320 --> 00:37:47,000
Speaker 6: cuts and paying down debt.

741
00:37:47,280 --> 00:37:50,120
Speaker 15: It's been a lot, though, for investors and business leaders

742
00:37:50,120 --> 00:37:51,400
Speaker 15: and CEOs to absorb.

743
00:37:51,800 --> 00:37:53,359
Speaker 14: What's your What would your.

744
00:37:53,239 --> 00:37:56,000
Speaker 15: Advice be to some of this constituency as they try

745
00:37:56,040 --> 00:37:57,880
Speaker 15: to deal with and they get worried about all the

746
00:37:57,880 --> 00:38:00,440
Speaker 15: stock market gyrations from these tariff threats.

747
00:38:01,080 --> 00:38:04,840
Speaker 6: Well, my first advice would be, don't overreact. I know

748
00:38:04,920 --> 00:38:07,200
Speaker 6: there's some talk about are we going to go into

749
00:38:07,239 --> 00:38:10,279
Speaker 6: a recession. I don't see us at all going into

750
00:38:10,320 --> 00:38:12,680
Speaker 6: a recession. I think we could have a little bit

751
00:38:12,680 --> 00:38:15,600
Speaker 6: of a slowdown in the economy as we pull back

752
00:38:15,640 --> 00:38:18,880
Speaker 6: on government spending, but I don't think investors should be

753
00:38:18,960 --> 00:38:21,799
Speaker 6: concerned about a recession. The second thing I would say

754
00:38:21,840 --> 00:38:25,000
Speaker 6: is we came in with the market being fully priced,

755
00:38:25,160 --> 00:38:28,160
Speaker 6: so I think a five to ten percent correction on

756
00:38:28,239 --> 00:38:30,800
Speaker 6: the S and P or the NASDAC actually makes sense.

757
00:38:31,320 --> 00:38:33,280
Speaker 4: The market's been really fueled.

758
00:38:32,920 --> 00:38:36,879
Speaker 6: By massive amounts of tech spending, particularly around AI. So

759
00:38:36,920 --> 00:38:39,520
Speaker 6: some of this is a natural correction in the market,

760
00:38:39,719 --> 00:38:42,719
Speaker 6: and some of this is the market worrying about tariffs

761
00:38:42,719 --> 00:38:44,040
Speaker 6: and the impact on tariffs.

762
00:38:44,760 --> 00:38:47,760
Speaker 15: We're talking a lot about tariffs. You mentioned taxes as well.

763
00:38:47,920 --> 00:38:51,000
Speaker 15: What do you make of Trump's strategy to do tariffs

764
00:38:51,040 --> 00:38:52,640
Speaker 15: before tax cuts this year.

765
00:38:54,000 --> 00:38:56,000
Speaker 4: Well, I think it's just a timing issue.

766
00:38:56,480 --> 00:38:59,560
Speaker 6: I think they're actually moving on what seems like an

767
00:38:59,560 --> 00:39:04,960
Speaker 6: incredible fast agenda, which is encouraging that Speaker Johnson says

768
00:39:04,960 --> 00:39:09,040
Speaker 6: he's going to get a bill to the floor before Easter, which,

769
00:39:09,360 --> 00:39:12,880
Speaker 6: if that's the case, that includes both tax cuts and border.

770
00:39:13,520 --> 00:39:16,880
Speaker 6: That's a very impressive timing. I mean, my concern about

771
00:39:16,880 --> 00:39:18,960
Speaker 6: this one big, beautiful bill was it was going to

772
00:39:18,960 --> 00:39:21,959
Speaker 6: take too long and that the president could get a quick,

773
00:39:22,000 --> 00:39:24,640
Speaker 6: easy win on the border. And the tax issues, as

774
00:39:24,640 --> 00:39:27,799
Speaker 6: you know, Selea, are quite complicated, so these things have

775
00:39:27,840 --> 00:39:30,440
Speaker 6: to be thought through carefully and balanced.

776
00:39:31,400 --> 00:39:34,600
Speaker 15: You, as treasure secretary in twenty seventeen, were the face

777
00:39:34,760 --> 00:39:39,200
Speaker 15: of the administration's efforts to get that tax bill through Congress.

778
00:39:39,680 --> 00:39:42,400
Speaker 15: Knowing based on that experience and what you know and

779
00:39:42,440 --> 00:39:44,920
Speaker 15: see now of Washington, what do you think the chances

780
00:39:44,960 --> 00:39:47,000
Speaker 15: are that there will be a successful extension of the

781
00:39:47,040 --> 00:39:48,360
Speaker 15: tax cuts that Trump seeks.

782
00:39:48,560 --> 00:39:51,719
Speaker 6: Oh, I definitely think there'll be a successful extension. I

783
00:39:51,760 --> 00:39:55,160
Speaker 6: think it just depends what it includes. And look, we're

784
00:39:55,239 --> 00:39:57,959
Speaker 6: very proud of the work we did in the first administration.

785
00:39:58,280 --> 00:40:02,120
Speaker 6: And obviously the tax cut and jobsc was sweeping reform.

786
00:40:02,200 --> 00:40:05,480
Speaker 6: I mean, it took all year because it impacted almost

787
00:40:05,560 --> 00:40:08,520
Speaker 6: every single part of the economy. It dealt with domestic

788
00:40:08,600 --> 00:40:12,920
Speaker 6: taxes at lowered corporate taxes, at lowered individual taxes, It

789
00:40:13,000 --> 00:40:16,160
Speaker 6: had business tax credits. Right now they're dealing with a

790
00:40:16,280 --> 00:40:20,040
Speaker 6: much smaller segment. The most important priority is in my

791
00:40:20,160 --> 00:40:24,840
Speaker 6: mind extending the tax cuts, which from an operational standpoint

792
00:40:24,880 --> 00:40:27,319
Speaker 6: is actually quite easy to do, and then they have

793
00:40:27,400 --> 00:40:29,960
Speaker 6: to consider some of these other ideas that the President

794
00:40:30,040 --> 00:40:32,080
Speaker 6: has thrown out and figure out how they could pay

795
00:40:32,080 --> 00:40:32,840
Speaker 6: for them as well.

796
00:40:33,360 --> 00:40:35,400
Speaker 15: Do you think that the salt cap is something that

797
00:40:35,480 --> 00:40:37,960
Speaker 15: needs to be part of the bill, Well.

798
00:40:37,760 --> 00:40:40,520
Speaker 6: It only needs to be part of the bill if

799
00:40:40,520 --> 00:40:43,240
Speaker 6: that's what you need to do to get Republican votes

800
00:40:43,440 --> 00:40:46,400
Speaker 6: to get the bill over the finish line. So there's

801
00:40:46,480 --> 00:40:50,840
Speaker 6: no question that, you know, removing the putting a cap

802
00:40:50,880 --> 00:40:53,640
Speaker 6: on salt was a fundamental issue that we thought of

803
00:40:53,680 --> 00:40:58,160
Speaker 6: fairness treating all the states similarly. Having said that, you know,

804
00:40:58,200 --> 00:41:02,040
Speaker 6: I recognize there's a small majority in the House and

805
00:41:02,080 --> 00:41:05,880
Speaker 6: this clearly impacts places like New York disproportionately, and I

806
00:41:05,960 --> 00:41:08,560
Speaker 6: understand why the New York members want to see that raised.

807
00:41:09,160 --> 00:41:10,799
Speaker 15: So far, it seems like that might be one of

808
00:41:10,800 --> 00:41:13,080
Speaker 15: the sticking points. Are there any other sticking points that

809
00:41:13,120 --> 00:41:15,640
Speaker 15: you see bubbling up as this tax bill comes together?

810
00:41:16,160 --> 00:41:20,080
Speaker 6: I think the bigger issue is the payfors. So you

811
00:41:20,160 --> 00:41:22,880
Speaker 6: have some people who say this should be scored against

812
00:41:23,040 --> 00:41:27,359
Speaker 6: current policy and it doesn't cost anything the traditional way

813
00:41:27,400 --> 00:41:34,279
Speaker 6: of scoring. This is against what's the current law with

814
00:41:34,280 --> 00:41:37,799
Speaker 6: with the reduction of the tax cuts, and that would

815
00:41:37,840 --> 00:41:40,640
Speaker 6: be over four trillion dollars. So obviously, if you score

816
00:41:40,680 --> 00:41:45,440
Speaker 6: it that way, the payfors are very significant. I am concerned,

817
00:41:45,480 --> 00:41:48,880
Speaker 6: and you know you've heard Treasury Secretary Besant and others

818
00:41:49,000 --> 00:41:52,399
Speaker 6: talk about the deficit. I think the deficit is our

819
00:41:52,480 --> 00:41:56,640
Speaker 6: number one problem today. So I think that whatever tax

820
00:41:56,719 --> 00:41:59,200
Speaker 6: cuts are passed, at least some of them have to

821
00:41:59,200 --> 00:41:59,799
Speaker 6: be paid for.

822
00:42:00,360 --> 00:42:03,440
Speaker 15: That's one of the larger differences between twenty seventeen when

823
00:42:03,440 --> 00:42:06,120
Speaker 15: you worked on this and now that the deficit is

824
00:42:06,200 --> 00:42:09,359
Speaker 15: just so big. How much harder does that make Besson's job.

825
00:42:10,280 --> 00:42:11,680
Speaker 4: I think it's quite significant.

826
00:42:11,719 --> 00:42:14,040
Speaker 6: And you know, if you put this in context, when

827
00:42:14,080 --> 00:42:17,480
Speaker 6: we did this, the entire tax bill cost a trillion

828
00:42:17,520 --> 00:42:20,480
Speaker 6: and a half dollars. There was about five hundred billion

829
00:42:20,520 --> 00:42:24,480
Speaker 6: that we thought that was the difference between dynamic in scoring,

830
00:42:24,920 --> 00:42:27,040
Speaker 6: and there was another five hundred billion of things that

831
00:42:27,080 --> 00:42:29,760
Speaker 6: were extenders. So we thought the true cost was closer

832
00:42:29,800 --> 00:42:33,120
Speaker 6: to five hundred billion, and that we could easily grow

833
00:42:33,160 --> 00:42:36,479
Speaker 6: the economy to pay for that. You're now talking about

834
00:42:36,520 --> 00:42:39,920
Speaker 6: an economy that's much bigger. The numbers are much bigger,

835
00:42:39,960 --> 00:42:43,560
Speaker 6: So the personal side alone is over four trillion dollars,

836
00:42:44,040 --> 00:42:47,440
Speaker 6: so the payfars are much more significant. We also have

837
00:42:47,560 --> 00:42:51,080
Speaker 6: a much bigger budget deficit. We had much more fiscal

838
00:42:51,160 --> 00:42:54,880
Speaker 6: room in twenty seventeen, and we had lower interest rates,

839
00:42:54,880 --> 00:42:57,279
Speaker 6: so the interest on the debt wasn't as big of

840
00:42:57,320 --> 00:43:00,479
Speaker 6: a problem. So you add all those things up, and yes,

841
00:43:01,400 --> 00:43:05,920
Speaker 6: it's more difficult today, but it's also simpler, and that

842
00:43:05,960 --> 00:43:08,040
Speaker 6: the tax cuts themselves are much simpler.

843
00:43:08,960 --> 00:43:12,040
Speaker 15: You know this so well. In twenty seventeen, you were

844
00:43:12,080 --> 00:43:15,720
Speaker 15: a key negotiator. You were the face of the administration's efforts.

845
00:43:15,800 --> 00:43:17,880
Speaker 15: Like I said, how important do you think it is

846
00:43:18,000 --> 00:43:21,600
Speaker 15: for the Treasury secretary to lead the charge on tax

847
00:43:21,640 --> 00:43:23,480
Speaker 15: bill creation and negotiation.

848
00:43:23,800 --> 00:43:26,800
Speaker 6: I think it's very important because it's the president's signature

849
00:43:26,840 --> 00:43:31,600
Speaker 6: achievement and extending it is critically important for the administration.

850
00:43:33,080 --> 00:43:34,919
Speaker 15: We got to know each other during those four years

851
00:43:34,920 --> 00:43:37,239
Speaker 15: when you were in office. But one area that we

852
00:43:37,320 --> 00:43:39,200
Speaker 15: never talked about that was never a big deal when

853
00:43:39,200 --> 00:43:42,439
Speaker 15: you were there was the payments system. With your four

854
00:43:42,520 --> 00:43:46,359
Speaker 15: years of experience, you know how sensitive and significant the

855
00:43:46,400 --> 00:43:50,000
Speaker 15: work at the Bureau of Fiscal Service is. Are you

856
00:43:50,200 --> 00:43:53,919
Speaker 15: concerned at all about Doge's access to the payment system.

857
00:43:54,280 --> 00:43:57,160
Speaker 6: Well, let's step back and just talk about the payment system,

858
00:43:57,280 --> 00:44:01,640
Speaker 6: and you're right, we didn't talk about it much. Treasury

859
00:44:01,800 --> 00:44:06,520
Speaker 6: is a gigantic payment processor for the federal government, so

860
00:44:06,719 --> 00:44:09,799
Speaker 6: this is an important part of Treasury. But Treasury's role

861
00:44:09,800 --> 00:44:12,400
Speaker 6: as you can think of as the bank. So what

862
00:44:12,440 --> 00:44:15,560
Speaker 6: Treasury does is it takes in files from other parts

863
00:44:15,600 --> 00:44:20,800
Speaker 6: of the government. The other departments certify those files. Treasury

864
00:44:20,840 --> 00:44:23,120
Speaker 6: make sure that it's in the proper form that it

865
00:44:23,160 --> 00:44:26,120
Speaker 6: can execute them, and it executes them. So it's not

866
00:44:26,280 --> 00:44:30,880
Speaker 6: Treasury's job to determine whether those payments are good payments

867
00:44:31,040 --> 00:44:35,440
Speaker 6: or bad payments. You know, I'm very comfortable with what

868
00:44:35,480 --> 00:44:39,719
Speaker 6: I understand Treasury Secretary has said in regards to the

869
00:44:39,760 --> 00:44:43,360
Speaker 6: controls over the payment system. That's the most important tissue.

870
00:44:43,880 --> 00:44:45,959
Speaker 6: I think some of the things that Elon has said

871
00:44:46,480 --> 00:44:48,520
Speaker 6: make a lot of sense. I mean, does it make

872
00:44:48,560 --> 00:44:51,440
Speaker 6: sense that you put a category payment around the payment?

873
00:44:51,520 --> 00:44:56,160
Speaker 6: Of course, now those are things that should be easily added,

874
00:44:57,320 --> 00:44:59,799
Speaker 6: you know. I will say what we did work on

875
00:45:00,239 --> 00:45:04,719
Speaker 6: was the transparency issues associated with this. That we put

876
00:45:04,800 --> 00:45:07,160
Speaker 6: up on the internet, a system where you could see

877
00:45:07,280 --> 00:45:10,520
Speaker 6: most of the government payments. So, you know, I think

878
00:45:10,880 --> 00:45:13,520
Speaker 6: a lot of this topic today makes a lot of sense.

879
00:45:13,560 --> 00:45:17,080
Speaker 6: But I'm comfortable today the system appears to be very safe.

880
00:45:17,360 --> 00:45:20,120
Speaker 15: Do you think that investors should be worried about the

881
00:45:20,200 --> 00:45:23,440
Speaker 15: US's ability to fulfill its debt obligations considering how much

882
00:45:23,480 --> 00:45:26,040
Speaker 15: activity there is around the payment system right now with

883
00:45:26,160 --> 00:45:26,839
Speaker 15: Doze in there.

884
00:45:27,920 --> 00:45:30,880
Speaker 6: Again, I know there were some concerns about Doze in

885
00:45:30,920 --> 00:45:34,440
Speaker 6: the beginning. That seems to be taken care of and

886
00:45:34,480 --> 00:45:35,120
Speaker 6: not an issue.

887
00:45:35,160 --> 00:45:35,520
Speaker 4: Obviously.

888
00:45:35,600 --> 00:45:38,600
Speaker 6: The bigger problem with the payments is going to be

889
00:45:38,640 --> 00:45:40,760
Speaker 6: the government debt and the debt ceiling.

890
00:45:41,560 --> 00:45:44,040
Speaker 15: One thing I've noticed that Secretary Beston is doing that's

891
00:45:44,080 --> 00:45:47,719
Speaker 15: a little bit different than years past, is putting a

892
00:45:48,160 --> 00:45:53,240
Speaker 15: focus on lowering long term bond yields instead of looking

893
00:45:53,320 --> 00:45:56,640
Speaker 15: to the Federal Reserve to lower interest rates. I'm curious

894
00:45:56,680 --> 00:45:57,920
Speaker 15: what you make of this strategy.

895
00:45:58,920 --> 00:46:01,840
Speaker 6: Well, I think he's right in the sense of a

896
00:46:02,000 --> 00:46:06,000
Speaker 6: large part of the economy is tied to longer term rates.

897
00:46:06,360 --> 00:46:09,480
Speaker 6: So whether it's mortgages or other things, and whether it's

898
00:46:09,520 --> 00:46:11,840
Speaker 6: the five year or the ten year, there's a large

899
00:46:11,840 --> 00:46:14,160
Speaker 6: part of the economy. For a long time, we had

900
00:46:14,160 --> 00:46:19,280
Speaker 6: a very flat yield curve. Ultimately, what the Fed does

901
00:46:19,520 --> 00:46:22,520
Speaker 6: will have an impact on long term rates. I think

902
00:46:22,520 --> 00:46:24,360
Speaker 6: if you actually look at the market today and you

903
00:46:24,400 --> 00:46:28,560
Speaker 6: look at the dot plot, you know the Fed is

904
00:46:28,640 --> 00:46:32,000
Speaker 6: telling you basically their expectation is that they will lower

905
00:46:32,080 --> 00:46:33,960
Speaker 6: rates down to three and a half percent.

906
00:46:34,640 --> 00:46:36,359
Speaker 4: It's just a question of when they get there.

907
00:46:36,520 --> 00:46:39,680
Speaker 6: Right now, that's projected next year, and I think the

908
00:46:39,719 --> 00:46:43,960
Speaker 6: ten year treasury already has that priced in, so I

909
00:46:44,000 --> 00:46:46,200
Speaker 6: think it's built into the market today.

910
00:46:47,080 --> 00:46:49,400
Speaker 15: In the last couple of weeks we have seen yields

911
00:46:49,560 --> 00:46:52,720
Speaker 15: drop due to recession fears. Do you think that Bessett

912
00:46:52,840 --> 00:46:55,680
Speaker 15: might be getting what he wanted but for the wrong reasons.

913
00:46:56,719 --> 00:46:59,799
Speaker 6: Well, I think he wants long term treasuries to come

914
00:46:59,840 --> 00:47:03,279
Speaker 6: down down and I think part of that is around

915
00:47:04,440 --> 00:47:09,680
Speaker 6: creating as there's less government spending. There's no question, and

916
00:47:09,719 --> 00:47:11,839
Speaker 6: they can they can convince the market that they're going

917
00:47:11,880 --> 00:47:15,600
Speaker 6: to cut the data set that will help long term rights.

918
00:47:15,840 --> 00:47:17,719
Speaker 6: But you know, I'd say, look that the ten year

919
00:47:17,760 --> 00:47:20,640
Speaker 6: has been bouncing around in a twenty basis point range,

920
00:47:20,960 --> 00:47:23,080
Speaker 6: which I consider to be a market range.

921
00:47:23,480 --> 00:47:25,759
Speaker 15: One of my favorite things to ask current and former

922
00:47:25,800 --> 00:47:28,600
Speaker 15: Treasure secretaries is about currency policy, something that we've spoken

923
00:47:28,640 --> 00:47:31,239
Speaker 15: about as well. We're expecting at least in the next

924
00:47:31,280 --> 00:47:34,160
Speaker 15: couple of weeks, the first foreign exchange policy report coming

925
00:47:34,200 --> 00:47:36,880
Speaker 15: out of the Treasure Department. When you were in office,

926
00:47:36,960 --> 00:47:40,279
Speaker 15: you labeled China a currency manipulator. I wonder if you

927
00:47:40,360 --> 00:47:43,200
Speaker 15: think that that is an effective tag to apply.

928
00:47:44,239 --> 00:47:46,640
Speaker 6: I think it's one of the effective tags to apply.

929
00:47:46,760 --> 00:47:49,399
Speaker 6: It's not the only effective tag, but I think it

930
00:47:49,440 --> 00:47:52,040
Speaker 6: was one of the tools in the toolbox. And now

931
00:47:52,080 --> 00:47:55,640
Speaker 6: it's more fun talking about currencies because I think, as

932
00:47:55,680 --> 00:47:58,160
Speaker 6: you know, kind of like Treasury Secretary one oh one,

933
00:47:58,320 --> 00:48:00,160
Speaker 6: is everybody's supposed to just say.

934
00:48:00,080 --> 00:48:01,920
Speaker 4: Oh, strong dollar, strong dollar.

935
00:48:02,560 --> 00:48:05,000
Speaker 6: As you remember, when I was at Davos, I made

936
00:48:05,040 --> 00:48:08,680
Speaker 6: for the first time a comment more on a stable

937
00:48:08,800 --> 00:48:13,080
Speaker 6: dollar and the benefits of a strong dollar and the

938
00:48:13,120 --> 00:48:14,880
Speaker 6: problems with a strong dollar in the market.

939
00:48:14,920 --> 00:48:17,080
Speaker 4: Reacted accordingly.

940
00:48:17,160 --> 00:48:20,759
Speaker 6: But I really do think the policy should be a

941
00:48:20,840 --> 00:48:25,000
Speaker 6: stable dollar policy. That's what's good for the US, that's

942
00:48:25,040 --> 00:48:26,080
Speaker 6: what's good for the world.

943
00:48:26,560 --> 00:48:27,680
Speaker 4: I think the dollar will be.

944
00:48:27,600 --> 00:48:31,680
Speaker 6: The reserve currency before the foreseeable future. But you don't

945
00:48:31,719 --> 00:48:34,640
Speaker 6: want a dollar that's too strong that hurts us from

946
00:48:34,640 --> 00:48:35,880
Speaker 6: an economic standpoint.

947
00:48:36,160 --> 00:48:38,640
Speaker 15: You can speak much more freely about currency policy. Now,

948
00:48:38,680 --> 00:48:40,840
Speaker 15: thank you so much for joining Kaylee.

949
00:48:41,000 --> 00:48:44,839
Speaker 14: Back to you, all right, Salamosen with the former US

950
00:48:44,880 --> 00:48:49,600
Speaker 14: Treasury Secretary Steven Mnuchen live here on Bloomberg TV and Radio.

951
00:48:49,680 --> 00:48:53,240
Speaker 14: Fascinating conversation, especially in light of the developments Joe Matthew

952
00:48:53,320 --> 00:48:56,000
Speaker 14: that we have gotten on trade just within the last

953
00:48:56,040 --> 00:48:59,080
Speaker 14: what six hours, as President Trump is now threatening to

954
00:48:59,120 --> 00:49:03,680
Speaker 14: retaliate for Europe's retaliation to his original steel and aluminum tariffs.

955
00:49:03,680 --> 00:49:06,200
Speaker 14: We're now talking about a potential two hundred percent levy

956
00:49:06,520 --> 00:49:09,760
Speaker 14: on things like wine coming from European nations, in addition,

957
00:49:09,800 --> 00:49:12,040
Speaker 14: of course to all of the other economic elements that

958
00:49:12,080 --> 00:49:15,759
Speaker 14: factor into the President's agenda. Tax policy well included in it.

959
00:49:16,000 --> 00:49:18,600
Speaker 2: That's true, and of course happening against the backdrop of

960
00:49:18,640 --> 00:49:21,080
Speaker 2: a meeting today with NATO's Secretary General Kaylee. They are

961
00:49:21,080 --> 00:49:22,799
Speaker 2: still in the Oval Office that this has been going

962
00:49:22,800 --> 00:49:25,040
Speaker 2: on now for well over a half an hour, and

963
00:49:25,080 --> 00:49:28,680
Speaker 2: it's a conversation that is keying off tariffs to some extent.

964
00:49:28,680 --> 00:49:30,640
Speaker 2: The President made clear in advance this would not just

965
00:49:30,640 --> 00:49:38,160
Speaker 2: be a NATO conversation, a Ukraine conversation, but one about trade.

966
00:49:40,200 --> 00:49:43,399
Speaker 2: Thanks for listening to the Balance of Power podcast. Make

967
00:49:43,440 --> 00:49:46,360
Speaker 2: sure to subscribe if you haven't already, at Apple, Spotify,

968
00:49:46,480 --> 00:49:49,040
Speaker 2: or wherever you get your podcasts, and you can find

969
00:49:49,120 --> 00:49:52,360
Speaker 2: us live every weekday from Washington, DC at noontime Eastern

970
00:49:52,640 --> 00:49:54,040
Speaker 2: at Bloomberg dot com